Capsonic Group v. Swick

• Decision Date: 01 May 1989
• Docket Number: No. 2-89-0027,2-89-0027
• Citation: Capsonic Group v. Swick, 537 N.E.2d 1378, 181 Ill.App.3d 988, 130 Ill.Dec. 909 (Ill. App. 1989)
• Parties: , 130 Ill.Dec. 909 CAPSONIC GROUP, a division of Gabriel, Inc., Plaintiff-Appellant, v. Andrew C. SWICK, Defendant-Appellee.
• Court: Appellate Court of Illinois

Page 1378

537 N.E.2d 1378

181 Ill.App.3d 988, 130 Ill.Dec. 909

CAPSONIC GROUP, a division of Gabriel, Inc., Plaintiff-Appellant, v.Andrew C. SWICK, Defendant-Appellee.

No. 2-89-0027.

Appellate Court of Illinois Second District.

May 1, 1989.

Rehearing Denied May 30, 1989.

Bishop & Crawford, Ltd., James L. Poznak, Siegel & Wille, Oakbrook Terrace, Sperling, Slater & Spitz, Bruce S. Sperling(argued), Chicago, for Capsonic Group.

Brady, McQueen, Martin, Collins & Jensen, Alfred Y. Kirkland, Jr.(argued), Elgin, Willard B. Widerberg, Elgin, for Andrew C. Swick.

Justice McLARENdelivered the opinion of the court:

Plaintiff appeals from the interlocutory order entered by the circuit court of Kane County on December 14, 1988.That order denied plaintiff's request for a preliminary injunction.The court held that it would not enforce a post-employment restrictive covenant in an employment agreement because the plaintiff failed to establish the existence of trade secrets or confidential information that would constitute a protectable interest.We affirm.

Plaintiff, Capsonic Group (Capsonic), is a division of Gabriel, Inc., a privately owned corporation located in Elgin, Illinois.Capsonic was formed in 1968 and is in the business of designing and manufacturing composite plastic/metal parts.Capsonic uses a process known as insert molding.Insert molding is a relatively new technology whereby metal inserts are molded directly into plastic bodies to create one solid piece.Capsonic's emphasis is in the development of customized automated systems for the manufacture of insert-molded parts.Capsonic uses standard components wherever possible so that it can concentrate its design efforts on the overall automated process.Capsonic has approximately 30 to 40 systems in operation, about one-half of which are automated.

An automated production system involves a number of areas or stations where a particular function is performed and different mechanisms which move the products and materials from station to station.One type of station involves a mold that actually forms the product.The other type of station consists of various operations which precede and follow the formation of the molded part.Examples of this type of station are probes to detect defective parts, ejectors to remove defective parts, stampers to imprint the parts, cleaning stations, stations to trim excess plastic or metal, testing stations, and packaging stations.Each station requires a machine or "component" to perform these particular tasks.There are a number of ways to accomplish each task, and, therefore, each station and movement involves a design choice.

Defendant, Andrew Swick, became employed by Capsonic as an automation engineer in December 1985.Swick had not worked with insert molding or in the design of automation systems to manufacture insert-molded products previously.Prior to beginning his employment, Swick was required to sign an employment agreement.The agreement included a clause stating that Swick would not disclose any confidential information.The agreement also contained the following noncompetition clauses:

"2.That during the period of his employment by CAPSONIC he will not, without the express written consent of CAPSONIC, engage at any time in any business or activity which competes directly or indirectly with the proper business of CAPSONIC or which is in any other way destructive of or harmful to any of the reasonable business interests of CAPSONIC.

3.After the termination of his employment with CAPSONIC, for any reason whatsoever, he will, when such information should remain confidential in order to protect the reasonable business interests of CAPSONIC, refrain from disclosing at any time the names or addresses of any CAPSONIC customers or CAPSONIC'S past or prospective dealings with its customers, the parties, dates or terms of any of CAPSONIC contracts or the nature of CAPSONIC'S trade secrets, systems, processes or methods or any other information obtained by Employee in the course of this employment with CAPSONIC when such information should remain confidential in order to protect the reasonable business interests of CAPSONIC.

4.After the termination of his employment with CAPSONIC regardless of the nature of or reason for termination, except with the written consent of CAPSONIC, Employee will, to protect the reasonable business interests of CAPSONIC, refrain for a period of two (2) years from entering into direct competition with CAPSONIC in connection with any customer or known prospective customer of CAPSONIC by engaging in or in any way advising, aiding or assisting in any business of manufacturing or selling or otherwise dealing with insert molding products and/or the machines for constructing same, and supplies therefor either as an individual on his own account, or as a partner or joint venturer, or as an employee, agent or salesman of any person or corporation or as a stockholder of any corporation, or in any other manner."

In January 1988, Capsonic revised Swick's employment agreement.This revision did not alter Swick's confidentiality or noncompetition obligations but included a cover letter which outlined certain aspects of these obligations.Swick signed the agreement.

Swick's initial position with Capsonic was as a maintenance engineer.His duties centered on maintaining Capsonic's automated production systems in operation.This included monitoring, testing, repairing, and fine-tuning each system.In 1987, Swick became the manager of Capsonic's automation department.As manager, Swick was responsible for designing the automated production systems as new products were developed and sold by Capsonic.Swick designed three automated systems while at Capsonic and was working on a fourth when his employment was terminated.

In addition to design work, Swick's responsibilities required substantial customer contact.Swick would make formal presentations to customers, participate in progress meetings, and formulate and revise design ideas to meet customers' requirements.Swick was also involved in constructing bids to submit to prospective customers.

In August 1988, Swick was approached by an employment agency representing Altair, a competitor of Capsonic.Swick pursued this employment prospect and, in October 1988, accepted a job with Altair.Capsonic learned of Swick's intent to work for Altair and on November 11, 1988, fired him.

On November 14, 1988, Capsonic filed a verified complaint for injunction against Swick alleging breach of contract, violation of implied duty of loyalty, violation of the Trade Secrets Act, breach of common law trade secrets, and unfair competition.Capsonic also filed a motion for a temporary restraining order(TRO).On November 15, 1988, the court granted Capsonic's motion for a TRO preventing Swick from working for Altair or revealing any information regarding Capsonic's business.The court also set a hearing on a preliminary injunction for November 21, 1988.On November 21, the court entered an order continuing the TRO and continuing the hearing on the preliminary injunction to November 30, 1988.The court heard testimony on November 30, December 1, 13 and 14.At the conclusion of the testimony, the court heard arguments from both counsel.These arguments were presented off the record.The court concluded that Capsonic had not established a protectable interest and, therefore, a preliminary injunction could not lie.The court entered an order denying Capsonic's request for a preliminary injunction and dissolved the TRO.Capsonic appeals from this order.

The sole issue presented in this case is whether the trial court erred in finding that Capsonic did not establish a protectable interest.

Initially, we note that the appeal is based on the denial of a motion for a preliminary injunction.However, we cannot find in the record that such a motion was ever filed.The pleadings as presented to this court include a complaint and a motion for a temporary restraining order.The motion for a TRO was granted.The complaint will be considered and disposed of at trial.The hearing on the nonexistent motion lasted 3 1/2 days.The legal arguments based on the testimony presented during the hearing were made off the record.

The appellant has the burden of presenting a sufficiently complete record of the proceedings of the trial court to support a claim of error.(Pecora Oil Co. v. Johnson(1987), 156 Ill.App.3d 521, 523, 108 Ill.Dec. 799, 509 N.E.2d 495.)If such a record is not presented, the reviewing court will presume that the trial court's ruling was in conformity with the law and had a sufficient factual basis.(Pecora, 156 Ill.App.3d at 523, 108 Ill.Dec. 799, 509 N.E.2d 495, citingFoutch v. O'Bryant(1984), 99 Ill.2d 389, 391-92, 76 Ill.Dec. 823, 459 N.E.2d 958.)Any doubt arising as a result of the incompleteness of the record will be resolved against the appellant.(Foutch, 99 Ill.2d at 392, 76 Ill.Dec. 823, 459 N.E.2d 958.)We will address the merits of the appeal in the context of the above principles.

The denial of a request for a preliminary injunction rests with the sound discretion of the trial court, and this court will not disturb that ruling unless the trial court abused its discretion.(Chicago Health Clubs, Inc. v. Picur(1988), 124 Ill.2d 1, 7-8, 124 Ill.Dec. 87, 528 N.E.2d 978.)However, in the case at bar, the propriety of a preliminary injunction is dependent upon the enforceability of the restrictive covenant contained in Swick's employment agreement.A post-employment restrictive covenant will be enforced only if reasonable, and that determination is a question of law.(Barrington Trucking Co. v. Casey(1969), 117 Ill.App.2d 151, 156, 253 N.E.2d 36.)Covenants not to compete are, in effect, restraints on trade and will be carefully scrutinized to ensure that their intended effect is not the preclusion of competition per se.The ...